The first thing I want to say is: keep your eye on natural gas. There appears to be some movement in the market and some talk of $5. The second thing I have to offer is the drop in unemployment claims is impressive. Could this be another signal the US labor market is finally beginning to turn?
Initial claims for state unemployment benefits fell 30,000 to a seasonally adjusted 339,000. It was the lowest number of new claims since February 2008.
Today started off pretty good for me, as I live in California. The data I came across has little bearing on any market specifically, but since California has the 8th largest economy on the planet, I thought the news had a general bearing on the potential holiday shopping season, which we all know does have an effect on corporate earnings.
Record-high retail prices for gasoline in California began to ease on Wednesday, receding from an unprecedented jump to $5 a gallon in some areas, even as further refinery disruptions threatened to slow the decline.
I also have an interesting question from a reader who, correctly, states that market volume has steadily declined since 2006. It is a point to consider and his question is a serious one.
- Volume in the market has steadily fallen since 2006. Are there any real investors left in the market or is it only day traders and institutions (MS, GS, BOA, etc.) left in the market with their supercomputers, automated strategy programs and algorithms? I feel it is almost impossible to compete in this market environment.
Market volume is down, as the market has taken some serious hits in investor confidence in the last few years – 2008 financial collapse, flash crash in 2010, threatened US bankruptcy – to name three. To his question, though, the big folks with the automated computers, high frequency trading, and powerful algorithms are a problem, but do they really make it impossible for a retail trader/investor to make money in the market?
Personally, I take the position that no matter who drives the market and no matter how it is driven, it still goes up and down because the principle of the market has not ever changed – people buy and sell because of their beliefs. As long as it is people behind the market (computers seeking out price differentials could change this), the market will still go up and it will go down. How one plays the up and down is another matter. People have written books on this subject. Me? I prefer to keep it simple. I trade stocks only, and I don’t trade by the minute and rarely do I trade by the day. If I hit my profit target, I will tighten down, and that might take me out in a day, but, generally, I ride the waves and those waves might roll for days, weeks, or months.
So, my advice is if you feel you cannot compete, check out your attitude and your strategy, as it takes both to be successful in the market. Oh, I have two more thoughts on the issues of computers in the market and the notion of “real’ investors in the market.
While general trading volume has been declining, the dollar volume is actually higher compared with 2010 and unless the SEC clamps down on computer trading in all its forms, we will experience more problems such as the 2010 flash crash and hyper-extended market moves.
Trade in the day; Invest in your life …
